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Tips for car rental insurance in North America

July 24, 2014



Not owning a car in US or Canada can make life harder, yet there are quite a few of us in that category. And obviously we resort to rental cars to fill in the gaps in our needs. As some one who have been enjoying renting car, particularly while I go on trips, I have learnt a thing or two about car rental insurance that makes me eligible to write this post.

When it comes to car rental insurance, most of us seek cheaper (or in many cases ‘cheapest’) option – be it limitng the insurance coverage or trying to use the default rental insurance that comes with your credit card. But, taking insurance coverage not seriously could get you into some serious financial trouble. Here are some of my tips that you can consider before taking insurance for your rental car.

1. Never go for un-braded rental agencies, just because its cheaper

Me and my friends once rented car for a weekend from a company called ‘Zoom Rent a Car’ in Mississauga, Canada and we had a terrible experience dealing with them, after we met with a small accident. Everything may seem normal until you meet with an unfortunate event. Even though we had taken insurance from the same rental company, they gave us hard time when we tried to raise a claim, and they ended up intimidating us into an ‘off the table’ settlement for a few thousand dollars.
Very soon, I came to know from a family member about a great experience with ‘Enterprise’ in such unexpected situations.

So, don’t just let yourself blindly attracted by cheapest deals in the internet, and deal with unprofessional agencies. Always prefer a branded rental agency like Enterprise or Avis, even if its an extra few dollars.

2. Know the limitations of your credit card auto rental insurance

This is one of the important things that I wanted to mention. Some of us have credit cards that provide ‘Auto Collision Damage Waiver’, and is a good thing only if you are well aware of your limitations.

Most credit card insurances have limitations on

– the type of vehicle you rent (vans, mini vans, pickup trucks, and in some cases SUVs are not covered)

– the cost of vehicle you rent (my CIBC platinum visa doesn’t cover vehicles costing above $60k)

– who drives the vehicle (in some cases, coverage applies only if you are behind the wheel, not your friend)

– special exclusions (most exotic vehicles and sports cars are not covered)

– the period that you can rent a vehicle continuously

So, if you are not fully aware of these terms, and if you end up falling in of their ‘exclusions’, well …its going to be a serious damage to your credit, not for your car anymore. J

3. Know about your plan deductions

‘Deductibles’ is the amount that the customer will have to contribute to the damage, before the insurance company starts contributing its share. If the cost of repair is $3000, and your deductible is $1000- – then you will pay $1000 and the insurance company will pay $2000.

Not always we meet with serious accidents, often the repairs are minor, and if you have higher deductible, you will end up paying more than what your insurance pays you.

4. Have adequate Third party liability (TPL) coverage

Canada, like most countries, mandates third party liability insurance paid by the vehicle owner (which is in this case, the rental company). However, the mandated coverage could be limited. Here, if you hit someone, you could be easily be liable to pay millions. Most rental car companies provide additional third party liability coverage for a little extra premium. Though it’s not a ‘must’ to take, it’s suggested that you are aware of how much you are covered for, and take adequate TPL coverage if needed.

5. Road-side assistance comes in handy

Road side assistance programs (otherwise called as ‘RAP’s ) are special services charged by the rental companies to respond to your emergency distress calls, with essential services like towing. I recently read an article in Metro daily (Toronto), about how car drivers are getting abused by the tow truck agencies in GTA, and the article sites incidents where their fee could mount up to thousands of dollars. Not just that, what if your battery is dead? what if you run out of fuel in the middle of nowhere in a cold winter weather? and much more….

For example, Enterprise offers RAP (Road side assistance program) for about $4/day, that includes 24 hrs assistance in situations like lost keys, fuel outage, vehicle breakdown etc.

6. Take full coverage from the rental agency if you are travelling in groups

If you are going out on a trip with a couple of other friends, I would recommend going for the ‘full coverage’ provided by the same car rental company, instead of using your own credit car insurance. As siad earlier, the credit card car rental insurance has several limitations, and since you are in a larger group, sharing the extra bucks for full coverage and sharing the risk along with that- is a smart approach.

7. Make sure you add your additional drivers properly

Once again, when you travel with a larger group (especially) with your friends, make sure to expect (or ask) who would like to share the drivers seat during the trip, and add those names as additional driver before beginning the trip. Most rental insurance doesnt cover damages if the driver is not on the paper. Note: calling the rental agency and asking them to add a person after you met with an accident is not going to work out, most rental agencies doesnt accept that.

8. If you are a traveller, you will need PAI

PAI (stands for Personal Accident Insurance) covers you with medical expenses, including hospital and ambulance expenses, in the event of an accident. Now, particularly, if you are a traveller to the country and you dont have proper travel insurance that covers you, PAI could be save you thousands of dollars in case of any unfortunate event.

Now, all the above mentioned steps are pre-cautions that you take before something happens. But just in case if the time is bad and you meet with a minor accident, do remember to take following actions to make your claims process go smooth
– Always get police report by voluntarily calling and reporting the authorities. trust me its worth the effort, the insurance companies cannot question your claim if you have an official report from police department
– Report immediately to the rental agency and insurance company. Most insurance companies require you to report an accident within 24 hrs to facilitate the claims process without hurdles
– Take pictures: “A picture is worth a thousand words” and its true in this case as well. Once again, one of the first few questions the car rental insurance companies ask you when you report an accident is that “do you any evidence for the accident? like pictures?”

Be educated and have a risk-free car rental insurance experience. Cheers!



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